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Volume 6, Issue 4     
In This Issue:

  Taming the Alpha Exec
  Is your boss a psychopath?
  Guilty, but not over
  Why your boss is overpaid
  Why do the rich keep working?
  The Buck stopped here
  Making your (Power) Point
  Building a platform for growth
  Five guidelines for using statistics
  Low prices = more customers? Not always
  Moving beyond debate: Start a dialogue
  Four strategies for making concessions
  Try before you buy
  What’s the boss worth?
  Flirting with disaster recovery
  Binomial creep
  Has advertising killed itself?
  2006 Career and Compensation Survey
  Asset-Based lending goes mainstream
  CPM climbs to higher ground
  Getting your body beach ready
  When society gets in the way of sexuality


Taming the Alpha Exec

Alpha Phyla
Alpha males and females come in four high-achieving flavors, each with dangerous weaknesses that can overpower its strengths.
Ambition, self-confidence, even a little bloodlust--all can be part of a great biz leader. They can also wreak havoc on an organization. Now, for the executive from hell, help is on the way. His name is George. He's a vice president at Cleveland's Eaton Corp. And he's a recovering alpha exec. It took him three years at Eaton to admit that he had a problem. It took another year for him to commit to doing something about it. Months of professional probing and coaching later, George T. Nguyen is learning how big a jerk he has been--autocratically dispensing orders through his administrative assistant, for example--and how little loyalty he has inspired. That psychic hurdle cleared, he's starting down the path to becoming a guy you'd actually want to hang out with--and a more effective executive. Says Nguyen now: "I have to work at this every day, every week, every month, because it's not a natural tendency for me. I'm 45 years old. If I don't make the change now, I won't have the incentive to change." You may be wondering when being an alpha exec became enough to warrant an intervention. For generations, after all, alpha characteristics have pretty much been prerequisites for success in American business--and most other endeavors. Are ambition, self-confidence, and competitiveness really so bad, especially when there are billions of dollars and thousands of careers at stake? The trouble is, there's a dark side to those traits we revere in bosses, a side that many just can't resist...
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Is Your Boss a Psychopath?

Odds are you've run across one of these characters in your career. They're glib, charming, manipulative, deceitful, ruthless -- and very, very destructive. And there may be lots of them in America's corner offices. The Factor 1 psychopathic traits seem like the playbook of many corporate power brokers through the decades. Manipulative? Louis B. Mayer was said to be a better actor than any of the stars he employed at MGM, able to turn on the tears at will to evoke sympathy during salary negotiations with his actors. Callous? Henry Ford hired thugs to crush union organizers, deployed machine guns at his plants, and stockpiled tear gas. He cheated on his wife with his teenage personal assistant and then had the younger woman marry his chauffeur as a cover. Lacking empathy? Hotel magnate Leona Helmsley shouted profanities at and summarily fired hundreds of employees allegedly for trivialities, like a maid missing a piece of lint. Remorseless? Soon after Martin Davis ascended to the top position at Gulf & Western, a visitor asked why half the offices were empty on the top floor of the company's Manhattan skyscraper. "Those were my enemies," Davis said. "I got rid of them." Deceitful? Oil baron Armand Hammer laundered money to pay for Soviet espionage. Grandiosity? Thy name is Trump...
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Guilty, But Not Over

A federal jury in Houston today found former Enron chiefs Kenneth Lay and Jeffrey Skilling guilty of securities fraud in the collapse of the once high-flying Houston energy company. The four-man, eight-woman jury convicted Lay and Skilling of misleading investors with false statements designed to hide Enron's tottering finances. Lay, 64, was convicted on six counts of conspiracy and fraud. He faces up to 45 years in prison. Sentencing will take place on Sept. 11.Skilling, 52, was convicted on 19 of 28 counts of conspiracy, fraud, insider trading and making false statements. All told, he faces a maximum of 185 years in prison. He was found not guilty on nine criminal counts.The convictions follow 14 weeks of trial, which included testimony from 54 witnesses. Bond for Lay was set at $5 million, and before leaving the courthouse, he was ordered to surrender his passport. Skilling's bond, which he posted with a cashier's check, had been set previously at $5 million by U.S. Magistrate Judge Frances Stacy. On the courthouse steps, Skilling denied that he committed any crime. "We fought the good fight--some things work, some things don't," he said. "Obviously, I'm disappointed [by the verdict]. That's the way the system works. "The case was a key test of the government's effort to prosecute executives...
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Why Your Boss Is Overpaid

America's Best And Worst Paying Jobs
If you want the cash, stay out of the kitchen.
It is a typical "Dilbert" strip. The boss announces, "Our CEO has voluntarily slashed his pay from $6 million per year to $4 million. In a written statement, he said he wants to 'share the pain.' Do you feel better now?" A downtrodden intern replies, "I make my underpants from sandwich bags." But that's office life, is it not? Bosses make obscene sums of money, while downtrodden cubicle slaves toil almost without reward. It might seem insane, but economists have a surprise for us: The insanity reflects nothing more than cool economic logic. There is method in the madness. The ugly truth is that your boss is probably overpaid--and it's for your benefit, not his. Why? It might be because he isn't being paid for the work he does but, rather, to inspire you. In other words, we work our socks off in underpaying jobs in the hope that one day we'll win the rat race and become overpaid fat cats ourselves. Economists call this "tournament theory." After all, managers find it hard to spot an excellent performance. It is a rare job where workers can be fairly paid according to some objective criteria...
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Why Do The Rich Keep Working?

Ralph Waldo Emerson wrote: "Don't waste life in doubts and fears; spend yourself on the work before you, well assured that the right performance of this hour's duties will be the best preparation for the hours and ages that will follow it." Peter followed that advice for much of his career, but today he might beg to differ with Emerson. ("Peter" is a pseudonym, but his story--and that of other wealthy workaholics--is very real.) The son of a modest Texas farmer, Peter wanted a bigger, grander life than his father led, and he worked hard to get it. By age 30, he was running a regional bank and had a wife and two kids. Over the next two decades, he moved his family 12 times--twice overseas. At 50, he was president of a large financial services firm in New York City. He owned a restored Georgian in a leafy suburb, a ski chalet in Telluride and a small compound in the Caribbean. He traveled for work incessantly, with limousines and Gulfstreams at his beck and call. His board connections led to bids at the most exclusive golf clubs. Peter had become a bona-fide world beater. Then, one day, his wife of 30 years declared: "I don't love you anymore. I need a new life." His kids piled on, saying he'd never "been there" for them. After logging three-quarters of each year on the road, Peter realized he had no real friends to confide in. He got divorced, drank heavily and eventually left his job. Peter's net worth had crossed the eight-figure mark years before his life unraveled. He could have hopped off the hamster wheel with plenty of time and riches to spare. And yet he kept running. "[That behavior] is rampant," says psychologist Robert Mintz, founder of New Executive Strategies...
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The Buck Stopped Here

The Destination Straddling the Spokane River, Post Falls is one of the fastest-growing cities in the nation.
"Uprooting a company is a tough, tough thing to go through. You're uprooting families."
Soaring business costs in California were driving Buck Knives to the brink. The company regained its edge by dismantling its factory--and putting it back together 1,453 miles away. Rising out of the snow-dusted fields like a gargantuan block of Post-it notes, the Buck Knives factory in the Idaho panhandle looks for all the world like a Northwest native. From the basalt columns adorning the driveway to the moose trophy gazing implacably down on the lobby and the spectacular chandelier built of antlers, the building feels like it belongs here, where the unyielding prairie of the Columbia Plateau confronts the chill hauteur of the Selkirk Mountains.
Boomtowns 2006
The most promising cities for entrepreneurs? In our most detailed survey yet, we looked at 393 regional economies to pinpoint where business is surging. Yuma, Arizona, here we come...
Appearances can be deceiving, however. Depending on how you look at it, Buck Knives is a transplant, a refugee, or a pilgrim from southern California. The story of how Buck moved its knife manufacturing company from the dusty, sun-drenched hills of El Cajon to this rugged patch of Idaho turf is a case study in business relocation. If it's true that geography is destiny, then Buck's voyage demonstrates that you can shape your destiny if you're willing to redraw your geography...
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Making Your (Power) Point

Presentations don't have to be a bore. Here are six new ways to liven them up. The only thing worse than sitting through a boring PowerPoint presentation is delivering one. Yet death by PowerPoint may be one of the biggest risks of doing business. On any given day, some 30 million PowerPoint presentations are delivered, according to Microsoft. Of course, when it was released for Windows in 1990, the software was an exciting new way of presenting information. But that's not always the case today. Among the most common offenses: Speakers simply read the slides to the audience; the text is too small; the color and animation are dull; the charts are too complex. Technology got us into this mess; now, technology is working hard to get us out. There are scores of new products designed to enhance, or even replace, PowerPoint. Some cost thousands, others are free. Here are six offerings that can help make your next presentation less of a snooze and more of a blockbuster. ...
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Building a Platform for Growth

Sometimes building growth in mature industries means more than simple product extensions or acquisitions. The answer? Develop "growth platforms" that extend your business into new domains. An excerpt from Harvard Business Review.





These executives typically had a sense of curiosity, an external focus, and authority to act.
Researchers at Harvard Business School and INSEAD helped Boston-based consulting firm Oyster International study how executives of twenty-four successful companies achieved organic growth over time. The answer: by creating "new growth platforms, on which they could build families of products, services, and businesses and extend their capabilities into multiple new domains." United Parcel Service is a prime example, as it expanded from a small-parcel delivery service into a variety of high-growth areas, including managing the flow of goods for customers. This excerpt reveals the common characteristics of companies that successfully built new growth platforms. UPS is not the only company that explicitly looks for platforms rather than products. Originally, Medtronic was highly focused on pacemakers, but under former CEO Bill George and current CEO Art Collins, it has leveraged its market knowledge and capabilities to establish broad platforms for products assisting in the treatment of cardiovascular, neurological, and spinal diseases, as well as diabetes. Branded consumer goods manufacturer Procter & Gamble has also cottoned on to the platform concept...
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Five Guidelines for Using Statistics

Do statistics tell the entire story? Managers must make effective use of the numbers they generate. Here are five tips to help ensure that you can rely on the numbers.





The only way to have confidence in the hypothetical course of action is to prove [that] the assumed causal connections do indeed hold.
Are defect rates declining? Is customer satisfaction rising? You inspect the numbers, but you're not sure whether to believe them. It isn't that you fear fraud or manipulation, it's that you don't know how much faith to put in statistics. You're right to be cautious. "The actual statistical calculations represent only 5 percent of the manager's work," says Frances Frei, an assistant professor at Harvard Business School who teaches two-day statistics seminars to corporate managers. "The other 95 percent should be spent determining the right calculations and interpreting the results." Here are some guidelines for using statistics effectively, derived from Frei's seminar and other sources. Although the perspectives offered here won't qualify you to be a high-powered statistical analyst, they will help you decide what to ask of the analysts whose numbers you rely on...
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Low Prices = More Customers? Not Always

Wal-Mart, Southwest Airlines, and Dell Computer are famous for their low prices. But before you follow their lead, consider the downside of cutting prices. An excerpt from the new book Manage for Profit, Not for Market Share.





The burden of proof must rest with the advocates of the price cut or loyalty incentive.
By arguing against price cuts as a form of competitive reaction when you perceive a competitive threat, we hope to convince you to plan your responses more carefully and consciously by thinking through the consequences first. In some situations, your competitor may force you to make this decision, because it has cut prices itself or entered your market at a much lower price point. But in other situations, companies decide to cut prices voluntarily, with no prompting from competitors and—as we show in this section—hardly any prompting from customers either. They decide to cut their prices out of sheer devotion to the idea that lower prices will revive their customers' wavering devotion and ultimately make the company better off. To defend the cuts, they cite changes in the competitive landscape, the convictions of upper management, a willingness to share cost savings and productivity improvements with customers, and the passage in their Economics 101 textbook that said lower prices result in higher volumes. Because price cuts seem to offer the easiest way to lavish special treatment on customers, companies find the temptation hard to resist. But resist they should. Proactive price cuts ...
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Moving Beyond Debate: Start a Dialogue

We’re often surrounded by polarizing debates. Here’s what influential leaders know: Dialogue doesn’t seek closure as debates do, but rather discovers new options. An excerpt from Leading Through Conflict by professional mediator Mark Gerzon.





"I never saw an instance of one or two disputants convincing the other by argument." —Thomas Jefferson
As I worked in more than a hundred organizations or communities over the past decade, I kept track of which form of discourse my clients most often wanted. They did not want more speeches and presentations. They did not want more debates between two know-it-alls, each of whom was sure they were right and the other person was wrong. They did not want yet another "exchange of views" that skirted difficult issues and papered over problems. What they yearned for was deep, honest, inclusive, and respectful dialogue. Dialogue is designed for situations in which people have fundamentally different frames of reference (also called worldviews, belief systems, mindsets, or "mental models"). "Ordinary conversation presupposes shared frameworks," says Daniel Yankelovich, who has been a pioneer in analyzing public opinion for the past quarter century. Dialogue makes just the opposite assumption: It assumes that the participants have different frameworks. The purpose of dialogue is to create communication across the border that separates them. It is a way of conversing that...
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Four Strategies for Making Concessions

"Concessions are often necessary in negotiation," says HBS professor Deepak Malhotra. "But they often go unappreciated and unreciprocated." Here he explains four strategies for building good will and reciprocity. From Negotiation.





The strategy of demanding and defining reciprocity plays out in a variety of contexts...
Most people understand that negotiation is a matter of give-and-take: You have to be willing to make concessions to get concessions in return. But the process of making concessions is easier said than done. Consider how events unfolded in the following management-union negotiation, adapted from Richard E. Walton and Robert B. McKersie's book A Behavioral Theory of Labor Negotiations: An Analysis of a Social Interaction System (ILR Press, 1991).The head of a manufacturing firm was preparing to initiate talks with the leadership of the employees' union. The biggest issue on the table was a wage increase. The union was asking for a 4 percent increase, while management wanted to raise salaries by only 1 percent.The executive considered the situation. During past negotiations, weeks were lost as each side jockeyed for position, feigned willingness to walk away, and eventually compromised on an unsurprising outcome. In this case, a deal at 2.5 percent, the midpoint of the two parties' opening positions, seemed likely to be agreeable to both sides. This time things would be different, he resolved. He would save everyone hassle and delay by making concessions early. Against the advice of the mediator, he opened discussions by announcing that the eventual outcome was obvious and that he was prepared to make a final offer: 3 percent, the most he could have offered...
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Try Before You Buy

Companies are using alliances to take the risk out of acquisitions. When Andreas Mueller-Schubert decided to move his company into the home entertainment business, he knew he would have to buy another company to do it. His company, Siemens Communications's Fixed Network Solutions, provides broadband Internet service providers with the array of add-ons (such as Internet telephone service) they use to attract new subscribers. By 2003, customers were asking about a new technology: television service piped over the Internet, known as IPTV. Mueller-Schubert, president of the Siemens division, began searching for promising acquisition targets. He soon found one: Myrio, a Bothell, Washington-based start-up with software that enables the various features of IPTV, such as video on demand. "This kind of middleware is the brain of the solution," says Mueller-Schubert. "If you want to be a leader in this market, it's a strategic asset you have to own." But buying a start-up in the high-tech business is risky. Technology changes fast, and companies often discover too late that they've placed the wrong bet. The target's products may not work well with the buyer's products. And, of course, fitting sometimes eccentric entrepreneurs into a large bureaucracy may prove futile. Siemens's answer was to hedge...
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What's the Boss Worth?

CFOs weigh in on executive compensation. This year's proxy season prompted the usual complaint about CEO pay: it's way too high. But finance executives don't see it that way. In a survey of more than 100 finance executives at the March CFO Rising conference, only 34 percent said that their bosses are overpaid. In fact, one quarter think their CEOs earn too little and another 43 percent say the compensation hits the mark. Of course, finance executives may not be the most impartial judges. Many think that the issue isn't CEO compensation per se as much as the discrepancy in pay between the CEO and — you guessed it — the CFO...
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Flirting with Disaster Recovery

There are plenty of good reasons to develop a business-continuity plan, but is Sarbox one of them? Mention business continuity to CFOs and see how long it takes them to change the subject. Yes, it's a risk issue, and they'll readily agree it demands attention. Just not theirs. Typically, business continuity, which includes contingencies for business interruptions ranging from telecom outages to natural disasters to, perhaps, terrorist attacks, is seen as a technology issue. In fact, in a 2005 survey of 1,286 managers claiming responsibility for their employers' business-continuity plans, the bulk of the respondents were either IT managers, tech staffers, or chief information officers. That may be changing...
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Binomial Creep

Although most companies still use Black-Scholes to value their stock options, a small but growing number are finding good reason to employ a more complicated valuation model. When CFOs willingly take on a heavier workload, something's up. Between 1995 and 2004, a grand total of just 68 companies that offered stock options to their employees switched from the traditional Black-Scholes model to a more complicated binomial valuation method. Black-Scholes is still far more prevalent; according to Aon Consulting, only 308 companies now use a binomial methodology, out of some 17,000 U.S. public companies in all. Aon observes, however, that last year alone, 134 companies switched from Black-Scholes to binomial, and so far this year, another 106 have made the transition. The binomial method is being embraced thanks, in part, to a search for lower stock-option valuations, says Charlie Stryker, a managing director with Trenwith Valuation. In 2004, the Financial Accounting Standards Board issued FAS 123R, which requires most public companies to expense stock options. Once those pro forma figures were slated for the balance sheet, many companies began looking into spending additional time and money on a model that would yield a lower stock-option valuation — and less of a hit to earnings...
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Has Advertising Killed Itself?

Video killed the radio star." Maybe that's true, but I'm not really sure. I am pretty sure, however, that advertising killed itself—or, at the very least, took the wind out of its own sails. Advertising used to work, and work well. What do I mean by "work?" I mean that once upon a time, when products and services of obvious differentiated quality and value were popping up like weeds in a field, consumers were predisposed to believe advertising claims, both overt and subtle. Since belief leads to action, sales of those advertised goods increased as well. Heinz's relish was, in the mind of the consumer, a perceivable improvement over generic relish. Sensory evidence—a full jar, no grit to chew, consistent texture and taste—proved it out. The same was true for many other modern wonders of the American age of mass production: the radio, telephone, automobile, television, instant cake mix, washing machine, dishwasher, air conditioner, etc. They were special products that, in fact, improved people's lives. During those heady marketing times, consumers were predisposed—based on past experience (AKA memory)—to endorse and thereby become behaviorally susceptible to advertising's representational content. Times were indeed very good for advertising, as well they should have been. Then something happened...
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2006 Career and Compensation Survey

Gary Ellis's long-term commitment to broadening his skills and experience as a finance professional was rewarded a year ago when he was named senior vice president and CFO of Minneapolis-based Medtronic. But fewer talented finance managers are choosing to emulate his steady, 16-year rise through the ranks of the medical technology company's finance function. Lucrative opportunities for short-term rewards in the corporate world are tempting these managers to forgo crucial development experiences, suggest the results of Business Finance's annual Finance Executive Career & Compensation Survey. People are jumping ship from the top accounting firms faster than they did before," says Neil S. Lebovits, president and COO of Ajilon Finance, a firm that provides managed services for professional staffing in Saddle Brook, N.J. And fewer CPAs enter the client side through the internal audit department, which traditionally served as a proving ground where new finance professionals learned the company, established relationships throughout the organization and gained management training. "A lot of money is being offered for other finance positions that are higher in demand," Lebovits points out. "They don't need that internal-audit entry point when so many glamorous companies are offering wonderful jobs. Many younger finance professionals are looking more at the short-term dollars than at what's best for their long-term career prospects." Those high-paying jobs tend to be compliance-related -- anything with internal controls, compliance or Sarbanes-Oxley in the title...
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Asset-Based Lending Goes Mainstream

Upfront: DSO Hits 10-Year Low
American businesses are realizing improved efficiencies in their A/R processes.
If you've assumed that asset-based lending is used only by companies in financial trouble, think again. Consider Chicago-based Hartmarx Corp., the manufacturer and marketer of 40-plus brands of men's and women's apparel, including such iconic names as Hart Schaffner Marx and Hickey-Freeman. For the past four years, the company has made a $200 million asset-based revolving line of credit its primary credit facility. The loan, from Wachovia Capital Finance, is secured by Hartmarx's accounts receivable and inventory. "It makes sense because we're borrowing based on a specific need," says Glenn Morgan, executive vice president and CFO with the $600 million company. Hartmarx's inventory and receivables balances peak toward the end of summer as retailers begin stocking their shelves for the holiday season. Because the loan amount available is tied to the level of these assets, the company can adjust its borrowings as its inventory and receivables increase and decrease. Although Hartmarx probably could switch to a more traditional cash-flow loan, Morgan isn't planning to move. "We're satisfied with this facility. It's competitive in terms of the interest rate and terms," he says. Hartmarx isn't the only mainstream organization that's using asset-based lending. Other household names, including Goodyear and Bumble Bee Seafoods LLC, also have used it in the past several years. According to the Commercial Finance Association, the total outstanding monthly average of asset-based loans jumped from $117 billion to $362 billion between 1994 and 2004...
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CRM Climbs to Higher Ground

A Roadmap for BPM Software Selection
At The BPM Summit last November, panelists from three companies shared their experiences of selecting and implementing business performance management software. Here are the best practices that emerged.
The customer may be king, but somewhere between rhetoric and reality, most organizations have discovered that courting and keeping customers is a royal pain. Over the last decade, global competition, downward pressure on profit margins, and easy access to product information and pricing for competitors and consumers have made it increasingly difficult for companies to achieve that goal. As a result, many organizations have turned to customer relationship management (CRM) systems not only to provide a technology foundation and business framework for managing complex tasks and to help them become more efficient and profitable, but also to maintain customer loyalty. Unfortunately, on their road to CRM success, they have often taken a few detours. "Too often, organizations haven't connected data to real-world practices," says Greg Comrie, senior vice president of solutions delivery at AGSI, a consulting firm headquartered in Atlanta. To avoid that problem, many companies are combining the operational and analytic sides of CRM to create a more sophisticated and holistic view of the enterprise. The two aspects traditionally have been used separately; the operational side relies on call centers and sales force automation (SFA) while analytics taps into existing business data. But together they're ushering in new opportunities and possibilities for predictive modeling, cross-selling, marketing and more...
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Getting your body beach-ready

                                                                                         Roy Morsch / Corbis file
For looking buff on the beach, it's essential to strength-train. Building muscle will give you a toned body and help minimize jiggle.
Strategies to help you slim down for swimsuit season. It's May already and swimsuit season is just around the corner. Maybe you meant to start getting in shape sooner (like back in January) but it didn't happen. So now you're wondering how to get results — and fast.The good news is that you can slim down and shape up in as little as four to eight weeks. The question is how much. "It depends where you're at now," says Jay Blahnik, a personal trainer in Laguna Beach, Calif., and a spokesperson for the IDEA Health and Fitness Association. If you're hoping to lose 50 pounds in eight weeks, it's not going to happen. Eight or 10 pounds is more like it. "Have realistic expectations," Blahnik says. Health experts say you can safely lose up to two pounds a week. So in eight weeks, you could lose as many as 16 pounds. But that's a fairly aggressive weight-loss goal. A more modest — and probably doable — approach is to lose a pound a week, experts say. And even that could significantly alter your beach body. "In eight weeks, 8 pounds could make a big difference in how a swimsuit looks on you," says Cynthia Sass, a registered dietitian and personal trainer in Tampa, Fla., and a spokesperson for the American Dietetic Association...
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When society gets in the way of sexuality

Culture clashes with human nature in the strangest of ways. Nobody doubts that our culture influences our sexuality and sexual expression. Germany seems to be a hotbed of pantyhose fetish Web sites, Japan has raised the schoolgirl uniform to high art, and male parliamentarians getting spanked can sometimes seem as British as high tea at Harrods. But our cultural influences are not always good for us. That’s part of the “moral values” debate we’ve been having in this country for 20 years or so. The question is, what can we do to keep the culture from harming us? How can we resist the worst bits of it, and embrace the best? While reading through some research on sex recently, one of the studies I encountered popped out at me. It raised the question “What is the problem with sex?” Sex is one of the most basic and fulfilling things we do. At least it should be. Assuming we’re not suffering from biological or health trouble, sex is a problem only when it clashes with the culture we’re in. Sometimes these clashes can be personally dramatic. Last fall, in a psychiatric journal, British researcher and clinician Nilamadhab Kar described the cases of two men...
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